Paul Krugman: Bailouts, Austerity Polices Amount To 'Abject Failure'

New York Times:

Financial markets are cheering the deal that emerged from Brussels early Thursday morning. Indeed, relative to what could have happened — an acrimonious failure to agree on anything — the fact that European leaders agreed on something, however vague the details and however inadequate it may prove, is a positive development.

Read the whole story: New York Times

Comments

[nothingchanges]

10:33 AM on 10/29/2011

15. Private jobs growth over the past two years has been faster than it was from 2001-2003. Public job losses have been a major factor in our current jobs crisis.

14. If federal, state, and local governments hadn't been slashing jobs since 2009, today's unemployment rate would be nearly a full percentage point lower.

http://www.fool.com/investing/general/2011/10/21/50-amazing-numbers-about-the-economy-.aspx

[American Boer]

08:43 AM on 10/29/2011

Mr. Krugman perhaps spent too much time partying in university?

[Peter Combs]

02:00 AM on 10/29/2011

Mr. Kruggman's argument of what large countries should do by looking at Iceland is silly. Iceland has a total population smaller than the city of St. Louis...the country's entire GDP is less than half the budget for the state of Massachusetts....

Letting Icelands Banks collapase was a minor financial event..he shou;d have also mentioned they were forced to raise interest rates to 17% and then BORROWED Billions of Euros form the IMF so the country wouldn;t collapse...

Not much of a solution.

[Sneakers1]

06:01 PM on 10/28/2011

Unlike the US, the UK did not adopt stimulus. Instead the UK boldly enacted an economic program that cut spending and raised taxes. The new GDP figures showed the U.S. economy grew at a healthier 2.5 percent last quarter. Meanwhile in the UK, where the Conservatives' draconian austerity program is now well underway, the economy has ground to a complete halt. The British GDP grew by only 0.2% in the second quarter.

Moreover, Moody's recently estimated that Obama's jobs plan, if passed, would add two percentage points to economic growth next year, add 1.9 million jobs, and cut unemployment by a full percentage point. By contrast, the Senate GOP plan isn't designed to help the economy in the short term, according to Moody's Faucher.

Republicans created this mess & instead of working w/Obama & solving our problems, they want to follow the path of what's being proven NOT to work. Unbelievable.

http://www.dailykos.com/story/2011/10/27/1030783/-Paul-Ryan-Gets-an-English-Lesson

[Michael GE]

07:44 PM on 10/28/2011

Hmm, I don't know if I would cite the UK. Maybe I am totally wrong, but from my perspective: The UK (sitting on the fence as usual) is just lucky. Lucky, because you can cash in easier on the EZ right now than on others.
The day the EZ becomes her act together, the UK is on the line. And, the way the UK acts, the only potential partner left will be the US. Let's get real: France, Germany and Italy, for all our weaknesses, we have the same size as the UK does have ... but each and everyone of us produces more tangible products ... the UK loathes the fact that Siemens might built their next commuter train, but let's get real, the other option is to ask Canada to built it. The UK, home of European engineering once, has lost the innate ability to produce anything other than printed paper.

[nofriendofrepublicans]

11:40 AM on 10/29/2011

The U.S. seems to be emulating.

[American Boer]

08:46 AM on 10/29/2011

It is funny how when these numbers are revised down you Obama cheerleaders disappear.

http://www.csmonitor.com/Business/2011/0826/Revised-US-growth-rate-just-1-percent-in-second-quarter

"Revised US growth rate: just 1 percent in second quarter

The economy grew at a rate of 1 percent in the second quarter, slower than first reported. The sluggish growth rate leaves the US at risk of tipping back into recession.

By Mark Trumbull, Staff writer / August 26, 2011"

[nofriendofrepublicans]

11:43 AM on 10/29/2011

It's funny how you bush lovers point the blame on this administration. 8 years of the worst president in American history, did you think everything was just going to come back to the Clinton years after dimbulb left?

[Sneakers1]

09:45 PM on 10/29/2011

American Boer -- can I ask you a simple question? Why are you posting news from August? You do realize that we're at the end of October, don't you?

Have a spooktactular Halloween!

[getsit]

03:15 PM on 10/28/2011

How is is possible, in this day and age with so many historical examples, that governments don't understand that economy prosperity comes from people with paychecks. It's not "confidence" that keeps people from spending, IT'S THE LACK OF MONEY. There is proof of this all over. When you leave the safety nets in place and even expand them people spend the money they receive for goods and services. This in turn stimulates demand of goods which in turn stimulates business production of goods and jobs. It's a duh! folks.

You can't take everything away from people and expect an economy to thrive. For every dime given to banks in bailouts and "loans" the same amounts should have been given to the real stimulators-the American people.

[MED1025]

04:40 PM on 10/28/2011

The bankers have congress on the payroll and have been well taken care of. Even the dullest congressman knows that their policies are bad for the average middle class person, but the average middle class person doesn't give him/her loads of cash.

This is not a result of a difference in ideology -this is corruption.

[American Boer]

08:47 AM on 10/29/2011

When you offer handouts people line up for them. The more you tax the productive they will drop off productivity. It is amazing that after all these years and countries later you lefties still do not get it.

[ManwithaParachute]

03:07 PM on 10/28/2011

Abject Bush.
Abject Conservative.

Abject Obama.
Abject Disappointment.

[codycap]

02:52 PM on 10/28/2011

How about some facts

The Truth about the Stimulus » Thinker's Jam

\http://www.thinkersjam.com/the-truth-about-the-stimulus/

research showing that austerity only increases deficits over the longer haul

http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_251-300/WP260.pdf

[getsit]

03:19 PM on 10/28/2011

Absolutely right.

[fds]

02:50 PM on 10/28/2011

"Paul Krugman: Bailouts, Austerity Polices Amount To 'Abject Failure'"

You fail again, HP.

[codycap]

03:26 PM on 10/28/2011

Wow! You're so simple when you put it that way.

http://www.businessinsider.com/paul-krugman-mike-huckabee-tom-friedman-maureen-dowd-liberl-conservative-columnist-2011-5

STUDY: Paul Krugman, Liberal Columnists Make Better Predictions Than Conservative Ones”

For people that keep hollering about being self sufficient--I and other liberals spend at least 75% of our time helping you short bus Republicans.

Does Washington have a spending problem or an income problem?

http://factcheck.org/2011/07/fiscal-factcheck/

[fds]

02:56 AM on 10/29/2011

I was not commenting on Krugman or his ideas. I like Krugman and his economic philosophies.

I was commenting on the typo in the headline.

[wsdave]

11:28 AM on 10/29/2011

Your factcheck.org link is a fail. It oversimplifies the information to the point of uselessness.

[JPMac]

02:20 PM on 10/28/2011

Lets start with the first failure...promising benefits that could in no way shape or form be paid in order to win elections!!!!

[Rodger leMonde]

10:36 PM on 10/28/2011

Actually we were planning to shift all the blame on you. It won't fix anything but it will save time when people ask who skrewed up. Phony explanations are so flexible and all purpose.

[jcaunter]

10:17 AM on 10/29/2011

Without any blame, there can be no accountability. And then who would we know to put in prison when someone honest finally gets into power?

[HappyBalance]

02:13 PM on 10/28/2011

"The doctrine in question amounts to the assertion that, in the aftermath of a financial crisis, banks must be bailed out but the general public must pay the price."

Bingo. What a different world we would be in if Obama tapped Krugmann instead of those Wall Street lackeys to run the economy. Heck of lot more people would have jobs.

"Iceland let the banks go bust and actually expanded its social safety net. Where everyone else was fixated on trying to placate international investors, Iceland imposed temporary controls on the movement of capital to give itself room to maneuver. "

This is what we should have done. No shared sacrifice here, at least not yet. I am optimistic though that the Occupy movement will continue to gain strength with every tear gas canister, every baton wielding action the powers that be employ.

[JPMac]

02:26 PM on 10/28/2011

Iceland really that is your example really!!!

Population: 318,452
GDP: 11.8 Billion

Grand Rapids MI is bigger than Iceland both in population and GDP!!!

[fds]

02:47 PM on 10/28/2011

Size doesn't matter. Economics is economics, whether small or large. The details will differ based on laws, but the same practices to get out of holes are used in small economies and enormous ones. This is why Krugman used Iceland as an example: It did what no other country even thought of.

[codycap]

04:26 PM on 10/28/2011

Remember when poison Chinese Sheetrock was in the news?

Sheetrock is heavier than concrete by volume. Why is it cheaper to buy it from China and ship it all the way to the U.S. than for us to make it here?

I wonder if we ship the materials to them, gypsum and paper? I wouldn't doubt it.

We have all the gypsum & paper we need in the U.S. to manufacture our own Sheetrock.

The reason is that we give tax breaks and subsidies to make it cheaper to import than to manufacture our own.

If they can ship something that heavy and cheap and still make a profit we have no chance of competing for anything until we become a 3rd world country.

“The United States had the world’s greatest trade surplus under Carter. Reagan very quickly gave us the world’s greatest trade deficit.”

"Have any idea which country is the Number ONE exporter in the world in total dollar terms? Well, it is not the US, at Number 4. True it has size, and ag projects and sells stuff like airplanes and satellites. But it is not China, either, even though China has size and tons of Cheap goods.

No, the Number ONE World Exporter is GERMANY. Socialist, expensive, high pay, 5 week vacation a year, socialist, Universal Health care Socialist Expensive GERMANY."

Why can Germany prosper with hardly any natural resources and being much closer to China while we can’t?”

[getsit]

03:17 PM on 10/28/2011

It would be interesting to see how Iceland's small businesses are surviving. If people have money, even safety net money, they are spending it. I would expect that has helped the small businesses survive too.

[JPMac]

02:13 PM on 10/28/2011

Must remind him of every idea he has ever had!!!

[cadawa]

02:10 PM on 10/28/2011

It's a failure for the body politic in their inability to make their voices heard. It's a resounding success for the bankers as outlined in their 'Banker's manifesto' alleged to have been written by JP Morgan.
"When through the process of the law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders" http://www.redicecreations.com/specialreports/2005/07jul/bankersmanifesto.html

[getsit]

03:20 PM on 10/28/2011

So much for the 'big government" the Republicans and the Libertarians are worried about. We have the ultimate of big government-the control of this country by corporations and the raping of the American people.

[PhoenixProg]

02:00 PM on 10/28/2011

You can't cut your way to prosperity. Something the European nations are finding out. It takes money to make money. Businesses leverage themselves every day. And while the interest on the debt will have to be paid someday, in the short term, putting people back to work will do more to improve the economy than cutting spending.

People with jobs have money to spend on needed goods and services, which creates demand. Demand creates more goods, which creates more jobs.

[dmsdzinr]

02:11 PM on 10/28/2011

Agreed! This is also known as Common Sense.

[oldstudent10]

02:53 PM on 10/28/2011

Amazing how your regression is only laced with sarcasm while being unarmed in the wit (and common sense) category...

[JPMac]

02:14 PM on 10/28/2011

I bet you have a really low credit score!!

[PhoenixProg]

02:56 PM on 10/31/2011

You bet wrong. Pay up. You probably are a wage slave. In that case, why do you vote Republican?

Personal finances and governmental finances and business finances are all different entities.

Governments have always had to borrow to go to war. The only difference during the Bush admin, is that he cut taxes at the same time he went to war, which had never been done in the history of the US before.

Businesses leverage all of the time as well for capital improvements.

And personal finances get leveraged as well. It's called a mortgage. As for my credit rating, it's just fine. Thanks for asking though.

[appeallawy]

01:49 PM on 10/28/2011

The systemic failure is the concept of everlasting unlimited growth that was meant to cover present cost incurred. In other words there was a world-wide ponzi scheme that bet that new assets would pay old debts and the cycle would continue endlessly just as your house was ALWAYs going to be worth more so it could be used as a cash machine. The profits were enormous and disappeared. The losses were taken over by society as a whole.

[gerald4]

01:40 PM on 10/28/2011

How can anyone (other than academic professors in college economics departments such as those advising President Obama) actually believe that the US Government can just continuously borrow more and more US dollars back from foreigners (actually sell foreigners freshly printed paper US Treasury Bonds to get back some of the US dollars that foreigners earned by making consumer goods that US citizens consumed) each quarter and then use these US dollars to pay for placing and keeping more and more US citizens on various US federal, State, and/or Local bureaucratic government payrolls or government contracts to solve the unemployment problem?

[angalmarketing2]

01:49 PM on 10/28/2011

They can and do because they have never been in the real world and along with O will always think that spend, spend, spend, tax, tax, tax, is the only way. Scream !!

[destin023]

02:28 PM on 10/28/2011

add the last caveat, "government contracts to solve the unemployme­nt problem", with no economic output & bingo, you hit the source..